Freight shipment volumes continued their sluggish upward pace in March, increasing 2.1% from February while freight spending increased 1%, according to the monthly index of freight trends published this week by Cass Information Systems. The index also showed that for the second month in a row shipment growth exceeded cost growth, signifying that rates have remained relatively flat.

Shipment expenditures in March rose 4.3% from March 2011. However, the March data represented a leveling off of year-over-year increases when compared with the January and February readings, the Brighton, Mo.-based auditing and payment firm said.

Rate growth has been dampened by the impact of moderately priced contract rates, which shippers and carriers negotiated last year at a time when prices were still relatively stable but when shippers were anticipating much higher rates to follow, according Roslyn Wilson, a Vienna, Va.-based analyst for Cass. By contrast, rates on the non-contractual “spot” market rose throughout March as demand increased and truck capacity contracted, she added.

Freight rates are rising, in some cases dramatically, depending on the region of the United States, Wilson said, but they are overall not increasing fast enough to recoup the higher costs of labor, equipment, and fuel

The Cass Truckload Linehaul Index shows that although truckload pricing has been trending downward slightly since January, it still remains near all-time high levels with truckload linehaul pricing up 7.2% year over year. The index isolates the linehaul component of full truckload costs from other components (e.g. fuel and accessorials), providing an accurate reflection of trends in baseline truckload prices.

Industry surveys of both shippers and carriers have indicated that sharp increases in rates are expected, “but so far demand has not been strong enough to support rate hikes,” Wilson said. “Truck capacity is still decreasing and many carriers have indicated that they do not plan to expand their fleets.”

The driver shortage continues to become a more serious problem as the economy gains strength, Wilson added, and many fleets have equipment parked because they have been unable to find drivers. “Mid‐sized trucking firms have been shifting to intermodal as a way to deal with the shortage. They are also investing in more trailers instead of new complete rigs,” she said.

Looking at freight volumes by mode, truck shipments have been on the rise, particularly at the end of March, and intermodal loadings were 2.4% higher than a year ago, the index shows. Not all modes experienced gains, however — rail carloads for the first three months of 2012 were down 2.2% compared to the same period in 2011.

For the long-term, Wilson said, the economy is showing signs of sustainable growth well into 2012. “Businesses hired over 200,000 new employees in March, retail sales are inching up, and Consumer Confidence grew again. Consumer spending has increased each month this year, but consumer credit has increased along with it,” she said. Although the expansion in the manufacturing sector slowed somewhat in March, it is still growing. Imports were down during the first quarter, and the nation’s ports have seen a drop in the number of incoming containers.

Exports, on the other hand, Wilson noted, are growing despite the shaky state of the global economy. “Many are forecasting a strong peak shipping season this year, but that will depend on retailers’ ability to bring down their high inventory levels,” she said. “The inventory to sales ratio — an indicator of inventory levels to support monthly sales — has been flat for almost five months, meaning there has been little progress in reducing inventories, which have reached pre‐recession levels.

The Cass Freight Index is based upon the shipments of hundreds of Cass clients representing a broad spectrum of industries. Cass Information Systems processes more than $20 billion in annual freight payables on behalf of its clients.